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Conditioned Responses towards Measures Relating to the Capital Cost of Short Sellers: Evidence from Taiwan

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  • Chih-Hsiang Chang

    (National University of Kaohsiung, Kaohsiung, Taiwan)

  • Wen-Shan Chiang

    (National University of Kaohsiung, Kaohsiung, Taiwan)

Abstract

This study draws on classical conditioning to explain how investors react to short sale-related measures. Our results reveal that measures related to the capital cost of short sellers cause a conditioned response among investors. This explains how investors actually perceive and relate to short sale-related measures and shows that many measures fail to achieve the expected results. Additionally, the conditioned response to measures related to the capital cost of short sellers reveals investor sentiment about the adjustment of short sale margin requirements.

Suggested Citation

  • Chih-Hsiang Chang & Wen-Shan Chiang, 2014. "Conditioned Responses towards Measures Relating to the Capital Cost of Short Sellers: Evidence from Taiwan," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 17(03), pages 1-27.
    • Handle: RePEc:wsi:rpbfmp:v:17:y:2014:i:03:n:s0219091514500192
    DOI: 10.1142/S0219091514500192
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    Cited by:

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    2. Tsai, Chia-Fen & Chang, Jung-Hsien & Tsai, Feng-Tse, 2021. "Lottery preferences and retail short selling," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).

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    More about this item

    Keywords

    Short sales; conditioned responses; investor sentiment; behavioral finance; psychological pitfalls;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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